New Geopolitics of Clean Energy Emerging

When the price of a battery for an electric vehicle (EV) descends to $200 per kilowatt hour storage the sticker price of that EV will be cheaper than that of a conventional car, said Mark Liebreich, CEO of Bloomberg New Energy Finance. Liebreich's slide presentation showed that the total cost of a lithium-ion battery pack is now about $1,000 per kilowatt hour.

Claude Mandil, former executive director of the International Energy Agency, agreed that electric vehicles could be a major transformative force. He said that EVs connect one sector, transportation, with the emerging clean energy sectors of solar- and wind-generated electricity.

The panel, which also included Doug Arent, executive director of the Joint Institute for Strategic Energy Analysis, described trends in both clean and conventional energy and their relation to global politics. The panel defined clean energy as renewables, energy efficiency and carbon capture and storage.

New Energy Tech Requires Industrial Metals and Chemicals

The prevalence, in relation to silicon, of the earth's chemical elements. The supply of these elements have a dramatic impact on the advancement of clean energy technology. Source: USGS

Bloomberg New Finance's Liebreich noted that in 2009 global investment in clean energy grew only 4 percent to $186 billion from 2008. This gave the appearance that investments were leveling off. But in 2010 the investment leaped 30 percent to $243 billion.

A major reason for the jump was economic stimulus. Governments had authorized billions of dollars for clean energy as part of overall economic stimulus packages and in 2010 much of that money began to enter the marketplace. Liebreich said that now the economy is about halfway through this clean energy stimulus spending, which he said is being dispersed at a rate of about $70 billion per year.

Also, new clean energy generating capacity is approaching par with new fossil fuel capacity. In 2009, using rough figures, about $208 billion was invested to build fossil fuel generators and $140 billion for clean energy. But in 2010 the gap closed; $210 billion went for new fossil fuel plants and $180 billion for clean energy. Liebreich's slide presentation also showed that the number of patents in clean energy has grown dramatically by the thousands, while fossil fuel patents have shrunk to a relatively small amount.

Although it has been documented often that China has become the dominant player in wind and solar manufacturing (it now has the most companies in the top ten lists in both categories), it is lagging in clean energy patents, with only 143 recently. By comparison, Japan had 4,672, the US 2,508 and Germany 2,391.

The cost of photovoltaic cells are dropping, and already solar electricity is cheaper than conventional power in Italy and Turkey (and Hawaii). When the PV cost of kilowatt hour drops to about 20 cents, which might occur in 2015 according to some forecasts, it will beat conventional rates in California, the UK, France. When it drops below 10 cents it will be competitive in most parts of the US.

Mandil said the EIA viewed its global energy analysis from the "Three E's:" energy security; economic growth; and environmental protection. He said clean energy is already, in some cases, advancing all three. For instance, onshore wind, but not offshore, is often competitive with conventional energy; Brazilian ethanol is competitive with gasoline but not corn ethanol.

He said six months ago the geopolitics of clean energy had a very different face. There seemed to be a consensus between oil consumer and oil producers over $80 a barrel oil. Consumers were willing to buy it at that price and producers saw it as a sustainable price that would not destroy demand for oil.

But now new factors have changed the dynamics. The Arab Spring has changed the calculus of international oil markets. OPEC had been delivering over 30 million barrels per day, but now that has dropped to 29 million.

Also, the Fukushima nuclear disaster has cast a large pall on the nuclear energy sector, most notably with Germany calling for a phase-out of its nuclear power by 2022.

Further, Mandil described the Cancun climate agreement as a partial success, but also noted that Copenhagen had not been as dismal a failure as some have called it. This means that climate considerations will continue to drive policy, but not as significantly as in the past. With major democracies facing elections in 2012 politicians will be viewing policy with an eye towards the ballot box. Mandil referred to this as the election year effect.

The policy for solar has not always been the most efficient in terms of physics. He said solar is not being deployed so much where it is sunny as it is where there are subsidies such as feed-in tariffs.

Arent, of the Joint Institute for Strategic Energy Analysis, noted that resource constraints, such as strategic metals, could be a major factor for clean energy. Metals for wind turbine magnets could face tightening supplies. Also, the biggest costs for photovoltaics are raw materials and metallization processes. Labor is ten percent or less whether the cell is manufactured in China or the United States.

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